Over the past two decades, some leading technology companies, e.g. Amazon (NASDAQ: AMZN), Microsoft (NASDAQ:MSFT)and Netflix (NASDAQ: NFLX)yielding life-changing returns. Many investors missed the boat, but the good news is that these three industry leaders still have plenty of growth momentum. Here’s why Amazon, Microsoft, and Netflix are still worth investing in now and holding over the next 20 years.
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Amazon is the leader in U.S. e-commerce and global cloud computing. The company generates stable revenue and earnings and benefits from a wide moat from multiple sources, including its brand name and network effects in e-commerce, as well as switching costs in cloud computing. Amazon’s competitive advantage should allow it to maintain its position in core markets that will continue to expand over the next two decades.
E-commerce still accounts for only 16.6% of total U.S. retail sales The shift to online commerce will boost Amazon’s core business and boost its advertising business. Additionally, Amazon is aggressively seeking to improve profit margins, particularly by shrinking its workforce and relying more on artificial intelligence (AI) and humanoid robots. Amazon has presented investors with huge opportunities over the past 20 years, but it’s still tapping into huge long-term opportunities. That’s why it’s a great choice.
Microsoft is another company with a long-term technology leadership position and a bright future. It dominates the computer operating system (OS) market, and its famous suite of productivity tools is part of the daily activities of millions of people and businesses, creating high switching costs for these services. These deep relationships with enterprises have made Microsoft one of the leaders in cloud computing, ranking second only to Amazon.
However, Microsoft Azure sales have grown faster than Amazon’s cloud business in recent quarters. Microsoft’s partnership with OpenAI allows it to make some of its leading artificial intelligence models available to customers in the cloud, another advantage for Microsoft. Microsoft’s future remains bright; even with a market cap approaching $3 trillion, there’s still plenty of room for upside.
Netflix has revolutionized the entertainment industry and dealt a (nearly) fatal blow to cable television with its streaming model, which allows people to watch shows on demand on any platform. The company now faces more competition than ever before. But Netflix maintains a strong competitive advantage through its brand name and deep ecosystem of paying customers, which provides it with troves of data on viewer habits to help it decide what content to license or produce.
